As I argued in my last post, fiscal crises call for emergency measures. Gov. Timothy M. Kaine has no choice to resort to whatever short-term expediency he can find to close a $2.5 billion revenue gap in the current biennial budget. But it would be nice if Virginia’s fiscal exertions resulted in some lasting gains in productivity.
Read the governor’s press release, and you’ll see that, at most, there are only $175 million in enduring efficiencies contained in the governor’s emergency financial plan. From the press release:
The Governor’s reduction strategies include
- $100 million in improved business practices and efficiencies
- nearly $32 million in the reduction or elimination of current services
- over $27 million in reduced personnel costs
- over $13 million in reduced discretionary expenses
For example, the Department of Forestry will save $50,000 by sharing the cost of a hydrologist with Virginia Tech; the Science Museum will save $100,000 by closing for an additional day each week; the Department of Taxation will save over $1.7 million by reducing technology costs; and the Department of Mental Health, Mental Retardation, and Substance Abuse services will save over $2 million by consolidating certain targeted administrative services regionally for their mental health treatment centers.
The other measures represent fiscal business as usual: withdrawing $400 million from the rainy day fund, borrowing $250 million for capital outlays, delaying pay raises for state employees, a hiring freeze and even 570 layoffs.
The layoffs sound like a real cut. But how lasting will they be? I went back to the Commonwealth of Virginia’s official employee count and deleted any line items pertaining to higher education in order to get pure numbers on state administration. Here’s the track record since 2001:
2001….. 66,927
2002….. 64,908
2003….. 64,044
2004….. 64,368
2005….. 63,099
2006….. 63,486
2007….. 65,309
2008….. 66,193
However, these numbers don’t tell the whole story. I suspect that the big drop from 2005 to 2006 represents the transfer of many state IT employees to Northrop Grumman — someone please correct me if I’m wrong. Also, I’m not clear about whether these numbers include “contract” employees. Whatever the details, after the temporary austerity budgets of the Warner administration shrunk state payroll, the numbers have crept back up to where they were at the peak of the dot.com prosperity (or even higher, depending on how the state counts IT and contract employees).
The moral of the story: Freezing positions and laying off employees without re-engineering government processes is a temporary expedient only. These moves will not create any lasting improvements to the cost of administering state government.